Sensex back above 41k, Nifty reclaims 12,000; time to buy?

Indian market rallied on January 5 for the third consecutive day post the Budget day fall. Benchmark indices reached above their crucial resistance levels. The S&P BSE Sensex is back above 41,000 while Nifty50 reclaimed 12,000 levels.

Let’s look at the final tally on D-Street on January 5 – the S&P BSE Sensex rose 353 points to 41,142 while the Nifty50 closed 109 points to close at 12,089.

Sectorally, the action was seen in metals, telecom, realty, and capital goods space, while profit taking was visible in power and consumer discretionary.

Broader markets outperformer as the S&P BSE Midcap index rose 1.3 percent while the S&P BSE Smallcap index was up 0.74 percent.

India’s service sector activity growth hitting a 7-year high in January boosted investors’ sentiment. On the global front, Asian stocks rose on hopes of additional stimulus from China to cushion the economic blow from a coronavirus outbreak.

Experts are of the view that there are plenty of opportunities to enter on dips in this market as the fundamentals still remain sound. “The market fundamentals are sound, the current rates which are close to 200-DMA are a good time to buy stocks as the market will inevitably rise in our view,” Abhishek Bansal, Chairman, and Managing Director, Abans Group of Companies told Moneycontrol.

“Also, the market is eyeing global sentiments. Lower crude oil prices along with some signs of stability returning to the Chinese market could be positive for Indian equities and hence provide an excellent opportunity to re-enter into quality stocks,” he said.

Now all eyes are on the outcome of the MPC committee meeting on Thursday. Most experts feel that the committee might leave the rates unchanged, but the future commentary on rates and stance will be watched out for.

“Continuing the big up move witnessed yesterday, the BSE Sensex rose a further 350 points today ahead of the last monetary policy for the financial year to be presented by RBI on Thursday,” S Ranganathan, Head of Research at LKP Securities told Moneycontrol.

“The buoyancy in key pivotal accelerated during afternoon trade as India’s Service Sector growth hit a 7 year high boosting optimism,” he said.

Top Nifty gainers – BPCL, Tata Steel, Yes Bank, and Tata Motors

Top Nifty losers – Power Grid, Dr. Reddy’s Laboratories, Hero MotoCorp, and Zee Entertainment

Stocks & Sectors:

Sectorally, the S&P BSE Metal index rose 2.9 percent, followed by the S&P BSE Telecom index that gained 2.5 percent, and the S&P BSE Realty index was up 2.5 percent.

On the losing front, the S&P BSE Power index was down 0.2 percent, followed by the S&P BSE Consumer Discretionary index which closed with losses of 0.05 percent.

Volume Spike of 200-700% was seen in REC, Adani Enterprises, Container Corp, Tata Global, Ambuja Cements, and BOSCH.

Long Buildup – Ambuja Cement, Apollo Tyres, SRF, Chola Finance

Short Buildup – Exide Industries, ZEE Entertainment, Manappuram Finance, ACC

Stocks in the News

BPCL ends 5% higher on reports of Rosneft looking to bid for Govt. stake

Shares of Tata Motors rallied 10 percent on February 5 after luxury carmaker Jaguar Land Rover showed a 2.8 percent year-on-year growth in UK sales.

YES Bank share price jumped over 8 percent on February 5 two days ahead of the shareholders’ extraordinary general meeting.

Share price of TVS Motor gained on February 5 after total three-wheelers sales grew 22.1 percent to 48,391 units in the said quarter as against 39,629 units in October-December period of 2018-19.

Share price of Zee Entertainment fell over 7 percent after the corporate affairs ministry ordered an inspection of the company’s financials.

Technical View:

Nifty formed a Three White Soldiers kind of candlestick pattern hinting at a near-term trend reversal in favour of bulls

Nifty is staring at a 50-Days simple moving average at 12,117 which could led to some profit taking

Traders are advised to retain optimistic outlook as long as Nifty sustains above the recent bullish gap zone of 11783 – 11789 levels.

If Nifty manages to sustain above 12120 levels then the next target shall be placed around 12266 whereas initial sign of weakness shall emerge on a close below 11953 levels, suggest experts.

Three levels: 11953, 12098, 12117

Max Call OI: 12500, 12400

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